The financial performance of aircraft manufacturers during world war II: the vicissitudes of war

Controversy has long surrounded the role and profitability of US defense contractors. From a financial perspective the question becomes whether defense contractors earn greater profits and investor returns than other companies during military conflicts. We explore this question by examining the accounting profitability and investor returns of US aircraft manufacturers before, during, and after World War II and compare them to a sample of non-defense firms. We also examine the reactions of aircraft stock prices to important political and military events of the time. We find that (1) aircraft stocks exhibited positive abnormal returns around events associated with defense buildups and outbreaks of hostile action and negative returns around events signaling an end to hostilities, (2) the company’s accounting returns improved during the war but these higher accounting returns did not translate into higher stock returns for the shareholders, and (3) investors could have earned higher stock returns had they switched out of aircraft stocks after Pearl Harbor and reinvested the proceeds in the overall market.     

Hiding Death: Contextualizing the Dover Ban

Following the terrorist attacks against the US in 2001, the Bush administration reaffirmed the Dover ban, the policy that prohibited press coverage of military coffins arriving at Dover Air Force Base from conflicts abroad. Conventional wisdom holds that the Bush administration enforced the ban in the hope of maintaining public support for the wars in Afghanistan and Iraq. This understanding, though, is incomplete. If the Dover ban were enforced only in response to eroding public opinion, then other coalition states would have responded likewise to this shared incentive. I argue instead that maintaining public support is only one factor among many that led the US to uphold this policy. In addition to considering the influence of factors such as perceived media bias and casualty aversion, I focus on necropolitics and the related impetus for governments to regulate the observation of death. Through this interpretation, part of the American response to the involuntary loss of sovereignty on 9/11 was to exercise control over the observation of death by enforcing the Dover ban. Through comparing the press policies of the US, the UK, and Canada, I show that the necropolitical blow to sovereignty that only the US experienced triggered a repressive policy that only the US was able to maintain.     

Does Geopolitical Risks Predict Stock Returns and Volatility of Leading Defense Companies? Evidence from a Nonparametric Approach

Abstract

We use the k-th-order nonparametric causality test at monthly frequency over the period of 1985:1 to 2016:06 to analyze whether geopolitical risks can predict movements in stock returns and volatility of 24 global defense firms. The nonparametric approach controls for the existing misspecification of a linear framework of causality, and hence, the mild evidence of causality obtained under the standard Granger tests cannot be relied upon. When we apply the nonparametric test, we find that there is no evidence of predictability of stock returns of these defense companies emanating from the geopolitical risk measure. However, the geopolitical risk index does predict realized volatility in 50% of the companies. Our results indicate that while global geopolitical events over a period of time is less likely to predict returns, such global risks are more inclined in affecting future risk profile of defense firms.     

The Effects of Terrorism on Turkish Financial Markets

Abstract

In this research, we analyzed how Turkish financial markets and foreign investors in the stock market reacted to the terror attacks in Turkey. Our analysis, which was performed using the terror index for the stock market and the foreign exchange market, revealed that returns, abnormal returns, and cumulative abnormal returns were not affected by the terror attacks; however, foreign investors in the stock market were affected. When the geographic regions of the terror attacks were analyzed, the findings showed that foreign investors were negatively affected mainly by the terror attacks that occurred in southeast Anatolia. Attack type and target type were important only for foreign investors. An evaluation of the interaction between the terror attacks and the markets with the involvement of the terrorist organizations indicated that only the foreign investors in the stock market were affected by Al-Qaeda and PKK-linked terror attacks. An evaluation of the effect of terror attacks in foreign countries on Turkish financial markets revealed no effect on the domestic stock market and foreign exchange markets. We also examined the volatility spillovers from the terror index to the stock market and found that terrorist attacks increased the volatility of the stock market.     

At war with social theory: Instrumental and communicative action in US military doctrine during the War on Terror

As US counterinsurgency campaigns draw to a close, doctrine for asymmetric warfare written during the War on Terror has come under heavy criticism. While many have argued that this shift to ‘winning hearts and minds’ is evidence that the United States is taking humanitarianism and nation-building seriously, others argue that a wide gap exists between US counterinsurgency doctrine and the protection of civilians afflicted by conflict. In this article, I show that the latter is true by comparing theories of instrumental and communicative action to US doctrine for operational design, stability operations, and counterinsurgency. I argue that these texts treat the people as an object to be manipulated for the achievement of pre-determined self-interested strategic goals rather than members of a community that jointly designs operations to fulfill shared objectives. However, US doctrine does contain communicative elements that, if prioritized, would better support humanitarian and state-building objectives otherwise subordinated in the War on Terror.     

Beyond balancing? Intrastate conflict and US grand strategy

Grand strategic theorists share an historical emphasis on interstate conflict, yet in contrast to the more frequent intrastate conflicts, these represent only 7 of the some 273 US military deployments since 1900. We argue that these intrastate conflicts limit the utility of regional balances of power in mitigating forms of conflict that the US may consider inimical to its national security interests. When considering potential changes to US force posture and grand strategy, American coercive statecraft should be theorised along a broader strategic continuum encompassing the full range of conflict.     

Rebel movements in the DRC

Despite a generally valiant effort on the part of the United Nations (UN) since 1999 to bring peace and stability to the Democratic Republic of the Congo (DRC), the country continues to be destabilised by rebel forces. These armed movements pose a constant threat to the fragile transition in the DRC, and security in the country is continuously undermined. This article examines rebel forces in the DRC from two perspectives. Firstly, it examines such movements as a manifestation of sub-national terrorism. Secondly, it examines armed movements from the perspective of so-called ‘ungoverned spaces’. The view taken in this article supports the scholarly insight and argument that in countries such as the DRC, armed movements and militias are filling power vacuums that are the result of the inability and lack of military capacity of weak states to fight these movements effectively. Specifically, the eastern and north-eastern parts of the DRC have been major conflict zones where sub-national terrorists employ terror as a strategy. In this context, the DRC is severely affected by terrorism – a phenomenon in the DRC that is intimately linked to the failure to effect sustained development and to consolidate accountable and effective governance.     

HISTORY REPEATING ITSELF

The response of the UN Security Council to the massive world war in the DRC is characterised by an abundance of rhetoric and a deficit of concrete action. When it has ac ted, its actions have often been clearly inappropriate, with the token deployment of lightly armed peacekeepers into a volatile area of ongoing conflict. In choosing such an option, it has shown how little political will there is for serious engagement, but also how little the Council has learnt from its own history. This paper seeks to analyse the Council's response to the conflict in the DRC, separating the rhetoric and the appearance of action from concrete measures designed at realising some form of conflict resolution.     

The State of UN Peacekeeping: Lessons from Congo

The article considers the state of UN peacekeeping through the prism of its long-running operation in the Democratic Republic of the Congo (DRC). Focusing in particular on the challenges raised by use of force and the protection of civilians in conditions of ongoing armed conflict, it argues that UN field operations must be aligned much more closely than they have been over the past 15 years to political and diplomatic efforts aimed at securing viable political settlements to internal conflict. The issues raised by the history of the UN’s troubled mission in the DRC are deeply relevant to the wider discussion of the organisation’s role in the field of peace and security.     

Yugoslavia: The Final Showdown

After a half century of inaction, NATO intervened in Yugoslavia on behalf of Kosovar Albanians. Methodologically speaking, the action represents a new way of making war in the wake of the Cold War's conclusion. A dramatic increase in the politicisation of warfare, which has manifested itself through political campaigns to sell war to the people, is visible in how the US and key NATO allies justified action in 1999. The campaign to sell the war brought together both emotional appeals to alleviate humanitarian suffering and realist dilemmas aimed at preventing wider conflict. Learning from history, I argue that the war against Yugoslavia unfolded as it did because of the political events of the 1990s and, that by understanding that series of events, we can better predict what future conflicts might look like.     

Horizontal Inequalities and Sons of the Soil Conflict in China

Why are large population movements conflict-prone in some regions while they remain peacefully integrated elsewhere? I argue that clashes between ethnically distinct indigenous populations and migrants – i.e. ‘Sons of the Soil (SoS) conflict’ – erupt when there are large socio-economic and political horizontal inequalities between ‘dominant migrants’ and locals. A comparative case study of two Chinese minority regions based on ethnographic fieldwork and population data provides a vivid illustration of the mechanisms linking migration to SoS conflict. With fewer HIs between migrants and locals, Inner Mongolia avoided many of the violent clashes that were commonplace in Qinghai, a province fraught with disparities.     

THE DEMOCRATIC REPUBLIC OF CONGO

The armed conflict in the DRC has been characterised by appalling, widespread and systematic human rights violations. It varies from civil war to a war between national armies. Much of the conflict falls between these two categories due to the involvement of foreign troops in civil strife, as well as foreign rebel groups fighting their home government's troops but on Congolese soil. The most pressing need is to cease hostilities and address the humanitarian situation in the country. Questions of justice and accountability, and issues relating to the rule of law will have to be addressed soon in order to achieve a durable peace in the country and in the region. Since there are links between different conflicts in the region, a broader solution should preferably be found. However, this would further complicate an already difficult proposition. Efforts limited to the DRC would be more feasible and could lead to similar measures in other conflict ridden countries in the region. This essay therefore discusses the available processes for justice.     

BLOOD DIAMONDS

Few issues are currently as haunted by rumours and allegations as diamonds. ‘Conflict’ diamonds fuelling African wars originate mostly in Central Africa. Vast quantities of rough diamonds pass through rebel territory in this region. In Angola, UNITA controlled the export of diamonds for many years. The main rebel groups in the Democratic Republic of Congo (DRC) tax and regulate artisan miners who sell to dealers. Both Angola and the DRC established exporting monopolies in 2000 to reduce smuggling and increase official state revenue. The monopolies were promoted as a means to prevent conflict diamonds from entering the legitimate rough trade. Both were meant to bring order to local diamond markets. This essay appraises their success by establishing whether state revenue, transparency and oversight have increased, and official outlets for conflict diamonds have been reduced. Principal foreign power sources behind the monopolies are examined and allegations of links are assessed, highlighting specific cases to present a more complete picture of the dynamics in the monopolies, seeking to separate fact from fiction.     

Two kinds of catastrophe: nuclear escalation and protracted war in Asia

China’s expanding strength and ambition may foreshadow a violent conflict with the United States. I describe two scenarios about how such a conflict would unfold. The article begins by examining the prospects for nuclear escalation, drawing on theories about politics, psychology, and inadvertent escalation. It then examines the prospects for protracted conventional war, a scenario that has received far less attention. I present a new theory of protraction based on technology, geography, and domestic politics. After assessing the logic of both scenarios against a hypothetical US–China conflict, I discuss which is more likely. The conclusion points to a sobering trade-off: efforts to avoid nuclear catastrophe increase the chance of a long and grueling fight.     

US grand strategy and the origins of the developmental state

ABSTRACT

Scholars have credited a model of state-led capitalism called the ‘developmental state’ with producing the economic miracles of Japan, South Korea, and Taiwan. This article examines how the developmental state was shaped by the Cold War. US grand strategy focused on accelerating economic development among allies that were under the greatest threat from Communist China and North Korea. American aid agencies became involved in the process of state-building in Japan, South Korea, and Taiwan and supported economic planning. I verify this claim by contrasting US policies on Taiwan with US policies in the Philippines, which faced a weaker Communist threat.     

CONTRIBUTORS

Conventional wisdom states that the stability-instability paradox does not explain the effect of nuclear proliferation on the conflict propensity of South Asia, and that nuclear weapons have had a different and more dangerous impact in South Asia than Cold War Europe. I argue that the paradox explains nuclear South Asia; that the similarities between nuclear South Asia and Cold War Europe are strong; and that conventional instability does not cause revisionist challenges in the long run. I develop and probe a psychological causal mechanism that explains the impact of nuclear weapons on Cold War Europe and South Asia. Following the ten-month mobilized crisis in 2002, Pakistani President Pervez Musharraf may have adopted a more moderate foreign policy toward India after experiencing fear of imminent nuclear war, as Soviet Premier Nikita Khrushchev did forty years earlier. I argue that the stability-instability paradox explains Cold War Europe and nuclear South Asia and will, conditional on Iranian and North Korean revisionism, predict the impact of nuclear weapon development on these states' conflict propensities.     

From adversity to prosperity

This article interrogates the continuing relevance of the contractarian governance paradigm to resource governance and the impact of exploitation on the local population and environment in the Democratic Republic of Congo (DRC), Zimbabwe and Ghana. It highlights the susceptibilities of their governance processes, particularly the roles of the elites of the host communities, the multinational corporations, and the governing authorities in appropriating resources for their personal interests, resulting in tensions and conflicts. This scenario is borne out of inept leadership, as well as the defective and compromised administrative mechanisms operational in these countries. In view of this, the article underscores the need for a ‘new governance management paradigm’ anchored on a communitarian framework, which incorporates all stakeholders, to guarantee sustainable peace and prosperity, particularly in conflict zones. The article therefore concludes that achieving a nexus between forestry, mining activities and economic development in these countries will require a restructuring of the existing governance mechanisms; and advocates for a new governance model capable of curbing the excesses of local and foreign hegemony, including a total overhaul of the seemingly compromised supervising authority.     

The ‘one-plus-four’ formula and transition in the Democratic Republic of Congo

In the aftermath of the signing of the ‘Accord Global et Inclusif’ (AGI) in Pretoria on 17 December 2002, not much was expected of President Thabo Mbeki's ‘imposed political monster’. In effect, after Mbeki came up with his ‘final plan’ providing for a transitional presidency made up of a president and four vice-presidents, many blamed ‘Mbeki's ignorance of Congolese political intricacies’. Mbeki's ‘one-plus-four’ formula was not only said to be unknown to the Congolese, but was also doomed to failure, given the nature of the stakeholders and the interests at stake in the DRC crisis. However, in view of the latest political developments in the DRC (a successful constitutional referendum as well as presidential, legislative and provincial elections, among others), we contend that, given the complexity of the Congolese conflict, Mbeki's design has emerged as a commendable contribution to the political solution of the Congolese crisis. Factors that have enabled such a transition mechanism to hold ought to be critically studied and eventually applied as a model for similar conflict situations in Africa and probably beyond.     

Network structure of insurgent groups and the success of DDR processes in Colombia

We argue that organizational structure of insurgent organizations influences the prospects for success in a disarmament, demobilization, and reintegration process (DDR). In essence, we argue that more cohesive, tighter networks have higher levels of supervision and control on its military units and increase the probability of successful DDR processes. In order to evaluate our hypotheses, we use the theory of networks to map and characterize the network structure of the United Self-Defense Forces of Colombia (AUC) and the Revolutionary Armed Forces of Colombia (FARC). Our results suggest that armed military units grouped in smaller and more isolated components on the network remilitarize with higher probability with respect to other units on the network. Also, we find that military units with high degree of centrality on the network play an important role for the risk of conflict recurrence and success in a DDR process.     

Buying Peace? Civil War Peace Duration and Private Military & Security Companies

Do Private Military and Security Companies (PMSCs) impact peace duration after civil war? I argue that the role these organisations play in a conflict can impact post-conflict stability. Specifically, I suggest that variance in services provided by PMSCs can influence rebels’ calculations about relative capabilities. These calculations then contribute to the probability for civil war recurrence. Building on the bargaining framework, with a focus on information and commitment problems, this article demonstrates that PMSCs participating in armed combat operations can jeopardise the stability of peace following civil war. Three case narratives (Angola, Sierra Leone and Croatia) are used to probe the theoretical argument and results are illustrative – PMSCs serving as force multipliers contribute to an increase in the probability for conflict recurrence.